From a public policy point of view there are two types of deflation. One I think is positive and one negative.
There could be a case where a economy is going through rapid economic growth as well structural changes where the relative prices of different sectors are being realigned. Because of the high productivity increases these relative price adjustments sometimes could take place with falling price levels in certain sectors which in turn mean very low inflation if not outright deflation. Examples of this are USA in the 1870s-1880s and PRC in 1999-2006 where both had a deflationary boom. I think there is nothing wrong with this and deflation is not something that hurts the growth of the economy.
Then there is the more familiar deflation situation where there is significant deleveraging after the bust of a credit boom. Even with attempts to boost money supply via easy credit, it could not make up for the fall of credit due to deleveraging and leads to deflation. Here the debt overhang of the credit boom becomes a greater burden as price level decreases which in turn leads to lower economic growth. This is what took place in Japan starting in the mid 1990s and there is a risk of this in Europe today. USA seems to have avoided this situation although it did have some deflation in 2009.
Side note, but I'm expecting this to happen when we hit the renewable energy science right on the head.
